Global stock markets positive after UK and US inflation releases

The UK’s top share index has been boosted by housebuilders after new inflation data at home and across the pond raised hopes of more interest rate cuts this year.

London’s FTSE 100 moved 45.82 points higher on Wednesday, or 0.56%, to 8,281.05.

Housebuilders and developers Berkeley, Taylor Wimpey, Persimmon and Barratt were among the day’s biggest risers, helping to lift the index into positive territory.

It followed new official figures showing Consumer Prices Index (CPI) inflation rose to 2.2% in July, from 2% in June.

While it represents the first time the inflation rate has increased since December, most economists had expected a sharper rise last month.

The softer increase in CPI could be encouraging for the Bank of England, some experts suggested, increasing the likelihood of another interest rate cut in September.

Meanwhile, fresh data from the US showed that CPI inflation fell to 2.9% in the year to July, also raising hopes that the Federal Reserve could reduce rates when it next meets next month.

“Today’s US inflation figure clears the runway for the Federal Reserve to initiate a rate cut at its September meeting,” said Richard Carter, head of fixed interest research at Quilter Cheviot.

“Clearly there is some concern that the economic slowdown in the US is more severe than is currently being presented by the data.

“This has caused market jitters of late, but investors should be calmed knowing that rate cuts are coming.

“However, where there is still a disconnect, as there was at the beginning of the year, is in the expected pace of these rate cuts.”

In the US stock markets, the S&P 500 was up about 0.3% and Dow Jones up 0.45% by the time European markets closed.

In Europe, France’s Cac 40 closed 0.79% higher and Germany’s Dax rose 0.41%.

The pound weakened amid expectations that interest rates could fall further. It was down 0.1% against the US dollar at 1.285, and down about 0.4% against the euro 1.165.

In company news, shares in Flutter jumped by more than a 10th after it revealed a stronger financial performance in recent months, with revenues a fifth higher than the previous year.

The betting giant upgraded its outlook for the full year after the improved performance. It also confirmed it was in talks with Playtech over possibly buying its Italian consumer business.

Shares in Flutter closed 10.5% higher.

Elsewhere, insurance giant Aviva also reported higher profits over the first half of the year, as general insurance premiums soared by nearly a fifth in the UK and Ireland.

Aviva said trading conditions in the UK, Ireland and Canada were “excellent” and it sees greater economic stability and political certainty boosting the UK market.

Shares in the firm closed 2.5% lower.

The biggest risers on the FTSE 100 were Hikma Pharmaceuticals, up 99p to 2,088p, Entain, up 26.4p to 607.8p, Berkeley Group, up 200p to 5,330p, Barratt Developments, up 20.2p to 549.2p, and Taylor Wimpey, up 5.75p to 164.25p.

The biggest fallers on the FTSE 100 were Rio Tinto, down 76p to 4,853p, Anglo American, down 33.5p to 2,198p, Spirax Group, down 85p to 7,565p, Beazley, down 6p to 728p, and Croda International, down 21p to 3,820p.